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PepsiCo, Inc. (PEP) Stock: An Earnings Preview

PepsiCo, Inc. (NYSE:PEP)PepsiCo, Inc. (NYSE:PEP) will report earnings on Wednesday. Here’s what you need to watch for in the company’s results.

Great expectations
The first issue that needs to be addressed is whether the beverage and snack food giant met Wall Street’s expectations. Analysts peg profits for PepsiCo at $1.19 per share this quarter. PepsiCo, Inc. (NYSE:PEP) booked earnings per share of $1.12 in the same quarter last year, so the company is expecting an improvement in profit growth. PepsiCo reported approximately $16 billion in sales for the second quarter of last year, and $65 billion for the full-year 2012.

Revenue growth
PepsiCo, Inc. (NYSE:PEP)’s first-quarter 2013 overall organic net revenues grew 4.4%. Even though PepsiCo has felt the effects of a recent pullback in domestic soda sales, about 65% of the company’s beverage business comes from non-carbonated offerings, a segment that shows real growth potential, notably in developed markets.

In relatively untapped emerging markets, both PepsiCo, Inc. (NYSE:PEP) and rival Coca-Cola are spending billions of dollars in the pursuit of vigorous growth. For example, India represents one of the last untouched markets for cola companies. As a result, Pepsi and Coke are fighting tooth and nail to gain market share for their namesake brands. Indian consumers sip 14 servings of soft drinks annually, while Americans guzzle more than 28 times as much cola. Yet the Asian nation’s population is nearly four times that of the U.S.

PepsiCo’s true dominance is in its status as the world’s foremost snack-food maker, boasting roughly 38% of U.S. salty snack retail sales. Meanwhile, closest competitors Kraft Foods Group Inc (NASDAQ:KRFT) and Kellogg Company (NYSE:K) hold about 9% and 5%, respectively, of domestic salty snack sales.

Outcomes from restructuring efforts
PepsiCo, Inc. (NYSE:PEP) streamlined its product portfolio and enhanced its marketing efforts in 2012. Initially, its stock price hadn’t popped as a result of the company’s restructuring efforts. However, PepsiCo’s investments now appear to be translating into top-line and bottom-line growth, and the company is on track to deliver a targeted $3 billion in productivity savings by 2015. With PepsiCo, Inc. (NYSE:PEP) stock trading near its all-time high, this is providing longtime shareholders with a refreshing jolt.

Foolish takeaway
When PepsiCo releases its second-quarter results on Wednesday, I’ll be watching to see exactly if and how the company achieved sales growth in both its beverage and snack-food businesses. I’ll also be looking for further evidence of success from the company’s restructuring efforts. Watch for these metrics to give a mid-year peek into how PepsiCo, Inc. (NYSE:PEP) is performing.

The article PepsiCo Stock: An Earnings Preview originally appeared on Fool.com and is written by Nicole Seghetti.

Fool contributor Nicole Seghetti owns shares of PepsiCo. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo, Inc. (NYSE:PEP).

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